Kash Patel calls Krispy Kreme stock a buy, sparks wild market rally

By Angel Adegbesan

 

Hours into his second day of contentious testimony in Congress, Kash Patel, the FBI director, sparked one of the more unusual stock rallies of the year.

 

Patel, who’s faced withering criticism from lawmakers in both the Senate and lower house, was pressed at one point on why he had purchased individual stocks while in office. Patel explained that he’s long liked to trade stocks and said that in this case he simply saw “good investment” opportunities in Krispy Kreme Inc. and ON Semiconductor Corp. 

 

Within minutes, Krispy Kreme stock was up 12 per cent and ON Semiconductor 4.1 per cent. The stocks closed the day up roughly 1 per cent and 0.5 per cent, respectively, amid a broader market selloff following the Federal Reserve’s interest-rate cut. 

 

That the director of the FBI can move stocks, with seemingly the most anodyne of comments, illustrates the sway on markets that crowds of amateur traders now have. They’ve bid up meme stocks and obscure crypto currencies and SPACs and, more recently, shares associated with President Donald Trump and his inner circle. Patel, who’s been a loyal Trump supporter for years, was appointed to run the FBI shortly after last year’s election.

 

The stocks matter came up Wednesday because Patel in July disclosed that he purchased between $15,000 to $50,000 worth of shares in Krispy Kreme and between $50,000 to $100,000 worth of ON Semiconductor.

 

“I just follow certain industries,” he said at the hearing, “and I thought they would be a good investment.” 

 

It’s not the first time shares of the Charlotte, North Carolina-based company have seen a wild intraday surge. The stock was caught up in a mini-revival of meme-stock mania in July when day-traders piled into beaten-down stocks despite few detectable changes to those companies’ fundamentals. Krispy Kreme rose about 24 per cent in July, its best monthly gain this year. 

 

The question, posed to Patel by Joe Neguse of Colorado, comes amid a bipartisan push to ban members of Congress from trading individual stocks as part of a broader effort to instill anti-corruption safeguards. Members of the executive branch, such as Patel, would not be subject to the ban under the current push.

 

“Given the nature of the position you hold, divesting entirely and not doing day trading now, I think will be something that will be in the interest of the American people,” Neguse said to Patel. “I just hope you would consider that and moving forward, perhaps not purchasing stocks in individual companies.”